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In Whittaker v Concept Fiduciaries Ltd, the Guernsey Royal Court allowed a taxpayer to set aside a transaction under which she transferred shares in her business to a Guernsey trust relying on “fundamentally flawed” tax advice on the basis of a mistake.

The relevant law of mistake was UK law. The transaction was intended to save tax but not only was it ineffective but would have cost tax. There has been some discussion recently as to whether a tax motivation would preclude rectifying by reason of mistake. The Court decided not but noted that rectification might be refused in “artificial tax avoidance arrangements”.

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